Published: Sat, October 20, 2018
Markets | By Noel Gibbs

Netflix shares soar as it announces 6.96m new members

Netflix shares soar as it announces 6.96m new members

In July, when Netflix last reported its quarterly earnings, the company's share price collapsed as subscriber growth appeared to slow.

But despite those concerns, and last quarter's subscriber wobble, Netflix shares have risen 78% this year, as consumers continue to move away from traditional media and access more content online. Netflix, Inc. has a 1-year low of $178.38 and a 1-year high of $423.21. The July letdown sent Netflix stock plunging more than 10 percent, prompting some to speculate that the company may have peaked. "We'll see how that does in terms of being able to accelerate our growth". In the United States, where Netflix can now claim nearly half of households as users, the company expects to add 1.8 million new customers this quarter, bringing the domestic total to 60.3 million. Streaming revenue surged 36%, reaching almost $4 billion in the quarter - a performance that matched Wall Street's forecasts of $4 billion.

What about Asia? Netflix doesn't break out subscriber figures by territory, but it did cite the region as contributing to "strong growth". Citigroup lowered their target price on Netflix and set a "neutral" rating for the company in a report on Monday. Netflix in the last quarter premiered a record of 676 hours in original programming, according to analysts, marking the first time the California-based streaming firm has exceeded 500 hours in a quarter. "The silver lining is that Netflix will have less content available to it, resulting in more stable cash burn; unfortunately, this subjects the company to the potential for slowing subscriber growth should its original content offering fail to achieve the quality and quantity of the lost content", the analyst added.

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Shares of the company were up 11 percent at $384.51 before the bell.

Netflix had told investors it expected to add about five million members in the quarter.

Analysts estimate that it added about 676 hours of original programming in the United States in the most recent quarter, 135% more than in the same period a year earlier.

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Grover has publicly denied these claims and rather than renewing for a second series, Netflix said earlier this week it was evaluating its options on the show.

The company exceeded forecasts in both USA and worldwide markets but the bulk of the new subscribers came from outside the United States, where the company has been investing aggressively. Revenue reached $4.0 billion, up from $2.9 billion in the year-ago period. On the call, Hastings declined to provide exact details on the company's India growth.

Neil Begley, a senior analyst at Moody's Investors Service, estimated that Netflix may spend closer to $9 billion on content this year, but he said keeping negative free cash flow to about $3 billion would not change the company's capital needs.

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India has also turned out to be a lucrative content hub for Netflix which plans to spend more than $8 billion on original programming this year.

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